Wheels Limited issued a debenture to East Bank years ago. The debenture was in the standard bank form described as a fixed and floating charge over all the assets of the company. However, due to inadvertence, the charge was not dated nor registered within time. The company is now in liquidation and the loan is in arrears. The bank seeks your legal advice as to whether it can rely on the charge to prove its claim in the winding up proceedings of the company. Advise the bank.

This problem is based on the legal consequences of non-registration of a charge. In this case the charge to East Bank Ltd by Wheels Limited was not registered and the company is now in liquidation. It is evident that the unregistered charge cannot be relied upon by the bank to prove its claim. This is because under Section 96(1) of the Companies Act, if a charged is not registered within 42 days of its execution or such other extended time as the court may permit on application, the charge is void as against the liquidator and the amount secured becomes payable immediately.

• In this case the charge is invalid and the debenture to East Bank Ltd is therefore unsecured.
• My advise to East Bank is to prove and rank the debt as an unsecured creditor. This advise is based on the provisions of the Companies Act.